Gold Recovers After Biggest One-Day Drop Since February
BusinessDay
Gold prices firmed in Europe on Friday, the day after posting their biggest one-day decline since February 29, as lower prices tempted some cautious buyers back to the market and as crude oil recovered from 18-month lows.
The metal fell sharply on Thursday after the Federal Reserve disappointed investors by failing to announce a new round of quantitative easing to boost growth in the United States.
Talk that more stimulus measures were on the way, which would maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom and weighing on the dollar, had buoyed the metal earlier this month.
It has since erased the bulk of June’s gains and is on track for its biggest weekly loss since early March.
Spot gold was up 0,3% at $1569,39 an ounce at 10.46 GMT, while US gold futures for August delivery were up $4,60 an ounce at $1570,10. Its modest gains tracked a recovery in crude oil prices from 18-month lows on Friday.
"Since August, September, gold has been trading like any other commodity," Natixis analyst Nic Brown said. "The one thing that will support prices this year is the potential for further aggressive monetary stimulus in the United States, whether it is QE or a new policy."
He said while the Fed had chosen not to pursue aggressive stimulus measures, poor economic data from Europe, China and the United States on Thursday suggested continued pressure for some sort of action to stimulate growth.
"The Fed may be forced into doing something," he said. "The fundamentals in the US may be improving ... but the European situation is managing to drag everyone else down with it."
A Reuters poll on Thursday showed Wall Street’s top bond firms still estimated a 50% chance that the Fed would begin a third round of quantitative easing.
Concerns over global growth remained high on Friday after data showed China’s factory sector shrank for an eighth month, business activity in the euro area contracted and US
manufacturing grew at its slowest pace in 11 months, while riskier assets were knocked by a Moody’s downgrade of the world’s major banks.
European shares extended the previous session’s losses as recent poor economic data raised fresh concerns about the pace of global recovery, while the dollar rose against a basket of currencies, supported by safe-haven flows.
"The recent sell-off (in gold) could well prove to be excessive ... if risk aversion rises again in the coming months," investment bank Fairfax said in a note.
GOOD SUPPORT
From a technical perspective, gold is seeing good support at $1560, and below that at $1530, analysts who study past price patterns for clues as to the future direction of trade said.
"The price action looks weak, but overall the metal has been contained in this $1528 to $1640 range for two months," ScotiaMocatta said in a note. "A break of $1523, the December low, would see liquidation looking for a bigger move."
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Gallup: Unemployment Jumps 0.5 Percent in February
The Washington Free Beacon
Gallup calculates that unemployment rose by 0.5 percent during the month of February, the largest month-to-month increase since December 2010.
U.S. unemployment, as measured by Gallup without seasonal adjustment, increased to 9.1% in February from 8.6% in January and 8.5% in December.
The 0.5-percentage-point increase in February compared with January is the largest such month-to-month change Gallup has recorded in its not-seasonally adjusted measure since December 2010, when the rate rose 0.8 points to 9.6% from 8.8% in November. A year ago, Gallup recorded a February increase of 0.4 percentage points, to 10.3% from 9.9% in January 2011.
In addition to the 9.1% of U.S. workers who are unemployed, 10.0% are working part time but want full-time work. This percentage is similar to the 10.1% in January, but is higher than the 9.6% of February 2011.
Gold Rebounds as Draft Greek Deal Lifts Euro
BusinessDay
Gold prices bounced back into positive territory on Tuesday, paring earlier losses in line with a rallying euro after a Greek official said the government is drafting an agreement on a second bailout.
Spot gold was up 0,3% at $1723,89 an ounce at 1502 GMT, having earlier fallen as low as $1709,29 an ounce, while US gold futures for February delivery were up $1,70 at $1726,60.
A Greek government official said Greece’s government is preparing the text of an agreement on a €130bn bailout that will be put to political leaders for approval, suggesting Athens had largely wrapped up talks with lenders on the rescue.
A conclusion to the discussions would likely to support gold, although it has struggled to maintain upward momentum as the markets await more information.
"If we do get a resolution of the current standoff, then gold will likely benefit," said Anne-Laure Tremblay, an analyst at BNP Paribas.
"The main downside risk lies with failure to reach an agreement between the Greek government and its creditors, which would open the door to a default. Such an event — or market perception that this event will occur — would likely trigger liquidation across asset classes, including gold."
The euro turned positive against the dollar, paring early losses to hit session highs, and Bund futures reversed gains after a Greek official said the government was drafting the bailout deal.
Prime Minister Lucas Papademos negotiated through most of the night with Greece’s European Union and IMF lenders, ending at 4 a.m. (0200 GMT) when a 24-hour national strike was about to begin, closing ports and disrupting public transport.
"The EU (had) suggested a deal should be reached by 15 February to ensure that the necessary arrangements are made before Greece makes a critical bond payment on March 20," said Standard Bank in a note.
Gold prices are up more than 10% so far this year after December’s sharp drop, supported by a Federal Reserve pledge to maintain ultra-loose monetary policy.
Hong Kong’s shipments of gold to mainland China in 2011 more than tripled from a year earlier, confirming China’s rapidly growing appetite for bullion, data released by the Hong Kong Census and Statistics bureau showed on Tuesday.
This came even though the gold flow from Hong Kong to China dropped about 62% in December on the month to 38605 kilograms, its lowest level since July.
"The 38,6 tonnes shipped ... might be interpreted by some as gold-negative," said UBS in a note. "We, however, think the real outliers were shipments in October and November, which... were greatly in excess of previous months’ volumes."
"And while December’s activity is the lowest since July, it’s still 245,2% higher year-on-year. Here’s a statistic that should lay to rest any doubts over Chinese gold consumption: the 2011 trend of imports from Hong Kong was up 258% from 2010."
Among other metals, silver was down 0,6% at $33,42 an ounce, while spot platinum eased 0,3% to $1618,49 an ounce, and spot palladium was down 1% at $695,63 an ounce.
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Gold Surges 2 Percent, Above $1,700 After Fed Statement
Reuters
Gold rallied 2 percent on Wednesday, rising above $1,700 an ounce for the first time since mid-December after the U.S. Federal Reserve said it will likely not raise rates for longer than previously expected due to a sluggish economic recovery.
Bullion sharply outperformed equities and industrial commodities after the Fed said it was unlikely to raise interest rates until at least late 2014. The central bank repeated its view that the U.S. economy faces "significant downside risks."
"From an equity standpoint, it's not a good story as the Fed was anticipating a much slower rate of growth than the market was," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
"Gold was reacting to the Fed's guidance of historically low rates all the way until 2014, which suggests that there will be plenty of investment money around for an extended period of time," he said.
Gold also received a boost after the central bank appeared more sanguine on the inflation outlook, suggesting prices were now rising at a pace consistent with policymakers' goals.
Spot gold was up 2.2 percent at $1,702.80 an ounce by 1:39 p.m. EST, after rising to a session peak of $1,703.71, the highest since December 12.
U.S. February gold futures were up $36.80 at $1,702.80 an ounce in decent trading volume.
Gold is now up 9 percent for the year, after the metal briefly entered a bear market and fell 10 percent in December as the metal had appeared to lose its safe-haven status.
Silver rose 3.4 percent on the day to $33.09 an ounce.
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Gold Rises, Breaks Ranks with Euro Again
Reuters
Gold rose on Thursday, a day after it broke ranks with riskier assets, on track to extend to a fifth straight day of gains in the face of a sharp fall in the euro on renewed European debt fears.
The metal reversed initial losses that were pressured by a report showing growth in the U.S. services sector only picked up slightly in December.
On Wednesday, gold hit a two-week high and appeared to buck a trend of moving in lockstep with the euro and the S&P 500 U.S. stock index. Gold has now recovered from last week's losses that briefly sent it into a bear market.
"I expect we are going to see money from hedge funds and money managers to return to gold as a safe haven by the end of the month," said George Nickas precious metals broker at commodities firm FCStone.
"It's just a matter of time for the gold buyers to return to the market as the European crisis hasn't been resolved," he said.
Spot gold gained 0.2 percent to $1,613.44 an ounce by 12:11 p.m. EST (1711 GMT).
U.S. February gold futures rose $2.30 to $1,615 an ounce.
Trading volume was strong for a third straight day, preliminary Reuters data showed. Analysts said stronger volume signaled renewed buying interest after gold fell sharply in thin holiday volume.
Earlier in the session, gold was under pressure as the euro slipped to its lowest since September 2010 against the U.S dollar as lingering concerns about euro zone debt crisis prompted weakness in the shared currency.
The 25-day correlation-log between spot gold and euro was near a one-year high reached last week, indicating strong positive link between bullion and the common unit.
"It is a risk on/risk off trade for gold. I expect gold to experience a volatile period throughout the first quarter, and this relates to the euro zone crisis," said Peter Fertig, consultant at Quantitative Commodity Research.
Silver edged up 0.1 percent to $29.18 an ounce, while platinum slipped 0.4 percent to $1,410.74 an ounce. Palladium dropped 1.4 percent to $637.22 an ounce.
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Gold Futures Rebound to Score 10% Gain in 2011
MarketWatch
Gold futures closed higher Friday, rebounding after dropping nearly 5% over the past six sessions to end a tumultuous year with a gain of 10%.
The February gold futures contract rose $25.90, or 1.7%, to settle at $1,566.80 an ounce on the Comex division of the New York Mercantile Exchange.
Futures prices had lost 4.7% in a six-session losing streak, but they gained $145.40, or 10%, for the year after closing out last year at $1,421.40.
For the quarter, gold lost 3.4%.
“Given the ongoing debt problems facing many economies and record low interest rates, we still expect the bull-run in gold to continue with the metal to rebound across 2012,” said James Moore, an analyst at TheBullionDesk.com, in a note.
Analysts blamed the recent losses in gold on year-end book squaring but on Friday, the lower gold prices offered investors a chance to buy back into the market against a backdrop on continued uncertainty over global economic growth and the euro-zone debt crisis.
“Gold investors in 2012 should watch two things above all others — zero rates and the risk of a China crash,” said Adrian Ash, head of research at BullionVault.
“We know the first is nailed on, for bank deposits at least, if not for weaker euro-zone debt,” he said in emailed comments. “That’s slowly driving people to seek out a more reliable, tightly-supplied store of wealth.”
But in China, “deregulation of gold only began a decade ago,” he said. “No one knows what happens to the world’s second-heaviest consumer when household incomes reverse.”
The metals market saw broad gains to track gold higher Friday, but still finished the year with significant losses.
March contract for silver climbed 2.2%, or 60 cents, to end at $27.92 an ounce. Futures prices ended the year 9.8% lower.
“Silver, like gold, has beaten all retail investment funds here in London hands down since the crisis broke in 2007,” said Ash. “But it’s so volatile, it’s struggling to capture people’s attention as a store of value.”
Indian and Chinese silver demand is growing, “but the industrial outlook threatens to weaken further, because high prices are forcing substitution and better efficiency,” especially in the solar market, he said.
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February Sees Gold up 6% and Silver up 19% on Inflation and Escalating Geopolitical Risk
GoldSeek
The paper-driven sell off in the gold market seen in January has been trumped by continuing robust physical demand in January and February. This has resulted in gold rising nearly 6% in February and silver’s strong industrial and investment demand leading to a 19% rise to new nominal 30-year highs.
Gold in USD – 6-Month (Daily) and 150-Day Moving Average
Political, and more importantly socioeconomic, revolutions in the Middle East and North Africa are leading to a degree of geopolitical instability and risk not seen in many years. This is leading to concerns about oil supplies from the region and hence the 14% jump in US crude oil just last week and deepening inflation concerns.
Hopes that the feudal Saudi regime will contain the situation by increasing production and exporting more oil are misplaced as the Saudis are already producing oil at maximum capacity and indeed are likely to have been overstating their oil reserves for some years, possibly considerably.
Ireland Government Bonds 10-Year – 1 Year (Daily)
With all eyes on the Middle East and North Africa, there has been less focus on the continuing European sovereign debt crisis. However, the crisis continues and recent days and weeks have seen government bonds in Greece and Ireland again come under pressure.
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Gold Surprises With Comeback, Ends Higher
MarketWatch
Gold futures staged a late-session comeback and ended in the black Wednesday after posting losses most of the session. Gold for February delivery rose $1.50, or 0.1%, to $1,385.80 an ounce on the Comex division of the New York Mercantile Exchange
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